 QuickBooks Online 2024. Enter transaction purchasing investments using bank feeds. Get ready and some coffee because we're making our books divine with QuickBooks Online 2024. Okay maybe the books aren't exactly divine but but they're pretty darn nice. Here we are in our QuickBooks Online bank feed practice file. We set up in a prior presentation. Let's open up the reports like we do every time. Reports on the left hand side within our favorites. We have the balance sheet. We're going to right click on it. Open it in a new tab. Same with the profit and loss otherwise known as the income statement. Right click open in a new tab as well as with the trial balance. If you don't have that trial balance in the favorites you can search for it here. Let's tab to the right. Close up the hamburger and change the range going from 010124 tab 022924 tab and select in the drop down so we can see the two months side by side run it tabbing to the right closing the hamburger and changing the range going from 010124 tab 022924 tab let's select the drop down once again months side by side run it and then we'll tab to the right one more time repeating the process going to close the hamburger and then we'll change the range 010124 tab 022924 tab selecting the drop down for months and run to refresh the reports. Let's go back to the balance sheet. Now we want to think about how the bank feeds might fit into a system where we're dealing with investments so in prior presentations we talked about those types of transactions first that are the easiest to automate with the bank feeds typically those being the ones that happen periodically on a monthly basis they repeat we have the same vendor we have one vendor that's going to be assigned to one particular account and we can then automate the transactions and then we talked about some that are a little bit more difficult such as those that don't happen quite as often like the purchase of equipment as well as inventory throwing kind of a wrench into the system oftentimes requiring us to do an accrual type of thing as opposed to just a cashed basis type of thing. Now we want to think about investing money into stocks and bonds now this is something that probably will not come up as often in your business if your business isn't for a financial investment business in other words if you're not doing the bookkeeping for a company that has investments in securities as its major source of income then you might not have a lot of investments within the business because that's not the point of the business the point of the business isn't to hold on to cash the point of the business is to have enough cash to purchase the things you need such as inventory machinery and equipment in order to utilize those assets to generate revenue in the future hopefully producing cash in the future which you can either invest back into the business buying more machinery equipment inventory or distribute it to the owner so the general idea would be if the company has a lot of cash and you don't need to reinvest it in the business you should give it to the owner in the form of draws if sole proprietorship or partnership or in the form of dividends if a corporation so that the owner can then invest it in some other way shape or form possibly they then invest it into the stocks and bonds the idea here is that the the QuickBooks should be and your business the accounting for it should be separated that's the point so that we can identify the goal of the business revenue generation okay that said you might have some instances where you still have some cash that you plan to put in the business and you're going to put some of it into investments I also want to touch on this because you might be using QuickBooks for your personal files as well it's a great tool for your personal finances which you can do the same thing just use QuickBooks and basically put your personal finances in there personal finances are actually a little bit more difficult in some cases because the objective is different the business objective should be clear revenue generation the personal objective is like to live well and spend balanced budgets and whatnot so that's a little bit more difficult but you could still track your information in QuickBooks and if you have a small business just a schedule c for example you might say hey look I don't want to separate QuickBooks files it's possible although many bookkeepers would not recommend it especially because it complicates the bookkeeping side of things but it's possible to use the class tracking feature so that you can break out your income statement into two columns which one could be your business and one could be your personal and then have your balance sheet which would be combined business and personal usually is how it would basically work which might work for small businesses because if you're just doing the QuickBooks for tax preparation and your only tax that you have is a schedule c then that's what you need you need the basically the income statement so you can look into that we have courses or sections on that if you want to touch on that concept in more detail okay so what if we were going to take some money out of the checking account and we're going to put it into like stocks and bonds for example well obviously we would see that transaction clear the the bank feeds money going out of the bank feeds and then we would have to allocate it to the proper location of the stocks and bonds there's not a typical kind of form to that because once again that's not part of our normal cycle it's not part of the normal customer vendor or payroll cycle it would happen kind of periodically but there would be cash affected and therefore you would see it go through the bank feeds and possibly use an expense form to then create your account note that the other side would not be an expense account however it would be an asset type of account then the question comes up well how would I group my asset type of accounts if i'm going to invest in say stocks and bonds what you typically do not want to do is make a separate account in QuickBooks for every individual type of investment that you have if you're investing in multiple different stocks and bonds classes right because QuickBooks is not designed generally to track every detail of your portfolio to see how well it is doing that there are other softwares to do that and you can of course go to the online platform where you are invested such as an e-trade or a vanguard use other resources to track the performance of the stocks what you want to do in QuickBooks is get it in in here so that your balance sheet lines up and and it's a it's representative of what you have at a given point in time possibly on a monthly or yearly basis and so that you can properly record your income and you can see your income being generated as you go now also realize there's other kinds of software that can pull in information from the financial institutions you might say hey look QuickBooks does that on the checking account i can pull in i can connect to the bank feeds that's what we're doing here however it's a little bit different than financial software because QuickBooks is not pulling in the ending balance you'll notice the checking account will not automatically be correct it's pulling in the transactions that we then have to include into the system and then double check that the ending balance is correct and you might ask why is that the case why does QuickBooks knows what the ending balance is it's on the bank statement why doesn't it just pull in the ending balance and the and the answer is well if we did that we wouldn't have all the detail we would not be able to create the income statement you have to enter the detail and then double check that it balances to what's on the bank statement because that's an internal control making sure that you have actually added all the detail and the other side of the transactions in a double entry accounting system will typically give you the timing statement the income statement but there's other software designed to do just that basically make a balance sheet at any given time so uh so quick in was owned by QuickBooks that's one software I think you can even do it in excel we have other courses on types of software if you want to look at software on a finance side where you can connect your financial institutions to them and then it'll give you at any given time your balance sheet for those items that are connected to the institution just pulling in the end balance that being like like the brokerage accounts most of them your bank accounts credit card accounts anything with your mortgage even anything with a financial kind of institution it could pull in basically the ending balances and that can be useful but it's doesn't replace something like QuickBooks because it only gives you a balance sheet it doesn't it doesn't help you to determine your income okay so what do you want to do within QuickBooks then well you just want to enter a summary possibly breaking out the summary by institution such as your bank versus like a vanguard or versus an e-trade the institutions that you are investing in if you are investing in stocks and bonds separately then you might break it out by institution and then stocks and bonds as a subcategory of the institutions however a lot of times you won't be able to do that because you're going to be investing in accounts that have both stocks and bonds mixed within it especially if you're an individual investor and you're investing in something like a retirement type of plan so that's so that's one thing that we could we can touch on and the next thing to just understand is that uh if it's your personal finances you might have some of this the investments under the umbrella of a retirement plan like a 401k 403b an IRA in that case you might make a part of your your short-term investments as a current asset those not under the retirement plan and then possibly have long-term investments for those that are under a retirement plan because you can't pull the money out and that'll give you an idea of what's more liquid and what's not as liquid once we get the investments on the books then you have the issue of how do I deal with the changes in value of the stock and how do I deal with income from it dividend and interest income so we'll talk a little bit about those as well as we go so let's first imagine that we're going to set up our chart of accounts let's go to the first tab and we're going to say okay I'm going to set up my chart of accounts over here so we'll go to transactions the debt on yeah that's right and then and then the chart of accounts and then I'm going to close up the hamburgie and let's make some accounts so let's let's pretend that we have investments in like three institutions uh e-trade vanguard and like the bank b of a investments or something so I'll say I'll make a parent account I'm going to say a new one and I'm going to say to do this is going to be an other current asset and I'm going to say it's going to be other other long-term assets this is other assets I want it to be a current asset other current asset and then investments tax investments us investments other and I'm going to say investments let's say stocks and bonds and this will be the parent account so I'm going to say okay let's save that and so that should be populated in other current assets so don't a don't there it is so then under that I'm going to say new and let's say another one which is also going to be an other current asset and then I'm going to say this is investments other and then I'll say this is investments let's put in front of it let's put this is going to be uh e-trade so that's an institution that we might be using to invest in and it's useful to group the investments by institution because then I can summarize my my investments by institution if I have multiple institutions uh and so I'm going to say that and then I'm going to make it a subcategory of my investments account uh to do subcategory of investments stocks and bonds okay so there's one so there we have that one and then let's make another one I'm going to say new and then we'll say this is another current asset again it's going to be investments and then I'm going to say investments let's call this one before vangar vangar that's another popular like place you might invest uh in stocks and bonds I'm going to say that one and we're going to go into investments stocks and bonds okay let's do that and so now we have two of them in there let's do one more new and then I'm going to call it an other current asset and let's say we have uh investments other I'll call it investments and this one I'll call b of a so we're going to have some investments in stocks and bonds with our bank and this is going to be a subcategory of investments stocks and bonds okay so that's where we can we can put we can house our investments let's actually make up some uh investments now so I'm going to go into excel and I'm going to imagine this is what's going to come through the bank feeds so what what so we have the date we've got the amount and description so let's say this happens on one three two uh two four and let's say we invest uh let's say we invest uh let's say just I need let's say uh 3000 and let's make it lower well that's fine 3000 and we're going to put that in e uh trade e-trade and then it would have some bank jargon right and then we're going to say on one five two four let's say we put 2700 in vanguard investments so we'd see this coming out these would be negatives and then we're going to say that on one five two four we also put uh 1500 in uh and be of a investments right and so then so then we would have so those are going to be money that we would see coming out of the checking account and into these institutions now some of these institutions we might actually be able to connect to the brokerage account oftentimes if you have your brokers through your bank you can do that not typically with like an e-trade or a vanguard I don't think you can connect your bank feeds to it but if it's if you're investing in stocks and bonds with your actual bank then you might be able to pull in your brokerage account which can help you track your dividends and interest so then what's going to happen uh the types of income that you get you might get dividend and uh interest let's say on two two uh 15 uh to four you've you receive uh six dollars right from e-trade dividends and then on two 15 to four you receive uh seven dollars from vanguard interest because possibly you had dividend if you invested in stocks you would get dividends if you invested in bonds you might get interest right and then and then let's say the b of a maybe they rule maybe they don't distribute it to your bank but they're going to rule their dividends back into back into your investment so that's one way that you're going to get income so now we have to deal with that income if we receive it we'll see it hit our bank again but if they roll the dividends and interest back into the investment it's never going to hit our checking account that would be like they gave it to us and then invested it back into the system so instead of giving us the six dollars they kept it and put it back into the investment so we would have invested 3600 now the other issue of course is the value of the stock is going to be going up and down so a month later the value of this might be 3200 or something and the question then would be do i want to adjust the value or just keep it at cost many people would argue to adjust it to fair market value uh because because you know what fair market value is if you're investing in stocks and bonds that are actually on the market all right so let's do that let's let's actually add these so i'm going to save this and then i'm going to save it as file save save as and i'm going to put it in as a csv file so this is and i named it 385 so if you have access to the materials you should be able to have access to this we will add it and then i'm going to go back on over here and say let's add those to our bank feeds as though they came in from the bank so i'm going to go back to the bank transaction tab under the drop down we're going to say upload from a file and then i'm going to select the file a csv file the latest and greatest one that 385 continue dropping it down that's going into the checking account as though they came in through the bank feeds it's in it does have a header it's one column and the date format is thus date lines up to date description description amount amount looks good continue everything looks like it's good so it's coming out of the checking account and these two are going into the checking account because that's income versus investments and then we'll say continue so quick books has imported five movie b to the end bn all right done all right so let's take a look at those so if we saw those come through the bank feeds then let's look at the money out say we're looking at money out and we're going to see then the e-trade so now let's let's open that one up it would come through as a as a transaction because we took it out of our checking account and put it into the investment account so we'd see it come through the bank feeds and we can then just say okay who's this going to be let's call it e-trade as the vendor just like normal and then we'll save it it's not going into owner draws it's going into e-trade investment so what did i what did i put investments e-trade so boom so we'll put it in there that's going to go into an asset account now we could make a rule for it but possibly we don't need to because we're not going to be doing this all the time we're not going to be taking money out of the checking account and putting it into e-trade as an investment all the time unless it's like a monthly maybe you could right if it was a monthly transaction after that that happens automatically then you might just put it in there all the time and create a rule but i won't do that right now i'm just going to save it and then if i go to the balance sheet and run it we'll see that e-trade there's the 3000 in e-trade and so notice it's under the parent account so that's the how you use the subsidiary account let's do another one and let's just put the rest of them in there so we're going to say okay okay and so here's the b of a so i'll go into that one i'm going to call it b of a i think i already have a b of a maybe not tell they snow it was a invent so let's say b of a investments add that and then this one's going to go into investments b of a and that's it so this is going to decrease the checking account other side going into the investment so i'm going to say confirm did i miss spell bonds looks like i misspelled bonds uh that's okay i'm not it's okay there it is boom and then i can do the last one let's do the last one and say vanguard so vanguard we took money out of here and put it into vanguard so i'll just copy vanguard not the bank jargon boom vanguard added and this is going to go into oh and it guessed it correctly that time boom looks good so we'll add that so we would see those coming through the bank feeds if i go to the to the balance sheet then we can see that uh in january if i go into the checking account it makes those expense forms just like normal noting that the expense form doesn't mean necessarily that the other side is going to be going to an expense if i go into the expense form it looks like this the other side this time going into an asset and not an expense but we're still using an expense form which is just like a check form but they needed another term for the check that didn't have a check number in it and then the other side are going into our investment categories down here so that looks good and boom if i go back there there we have it so now we've got our investments that i can collapse and i can compare my investments to the financial institution statements pretty clearly this way so my investments from e-trade i could say what happened to the e-trade investments and compare it to what i have here on my balance sheet pretty clearly and then if i want more detail on all the individual types of investments then i would go to the e-trade statement or possibly use other software to dig into that kind of detail i want the summary here on my financial statements for the balance sheet and then i'd also like to track on the income statement the income from these from these trades uh from from these investments so we had some income which could be interest might be income dividends now those there's a difference because most of the times when you invest in stocks and bonds you could either take the dividend and interest and reinvest it into the into the account which means you will not see it hit your checking account because you will never receive it it will automatically be reinvested or you could say that i want to receive my dividends and interest in which case we would see it come through the checking account now sometimes again you might have your actual uh investment account connected to the bank feeds as well but oftentimes you might not so you're only going to see what hits the checking account then if you don't have the investment account right so that would be these two so now i have these two that came through on the income side so this is going to be money in i'm going to say money in and so so now i see that i had dividends from e-trade so if i go into the dividends from e-trade then i'm going to say all right this is e-trade again and so we already have e-trade as a vendor they might have to be a customer this time e-trade customer because it's really a financial institution but we have to have one or the other and then we're going to say the category in in this case now it's going to be income so if i say i'm going to add an income account but i'm not going to make it uh my normal income account because this isn't part of my normal operations i'm going to put it into other incomes which means it'll be at the bottom of the income statement so i'm going to put in the other incomes dividend income that looks good and so we'll keep it there so i'll save and close it and then this is one i could make a rule for because this would be something that would repeat if i was to have a system where they're going to be paying me dividends and i invest in types of stocks to give me dividends so i'm not going to create the rule right now but it would be the same kind of activity to create the rule if you wanted to be repetitive let's save it and check it out balance sheet run it so now we had an increase to the checking account i think it was in february this time for the dividends so there's the six dollars uh dividend income went in there with of course a deposit form because it's an increase the other side going to the income statement profit and loss not in the top line of income but down below so notice this other income is useful because it allows you to put those types of incomes you don't expect to repeat so now we have the operating income which is income minus expenses basically net income before we have the other stuff that's not part of the normal operations now i'm not going to get into generally accepted accounting principles and and whatnot uh in terms of when exactly you what are the rules to put it down here in this and that but the general idea is that if it's if it's not part of your normal operations you might put it down here so let the interest will do the same thing so vanguard interest because if you're invested in bonds then you might have interest that you're going to receive instead of dividends and it would hit your checking account if you didn't reinvest it so i'm going to say vanguard customer customer tab and boom and then this time i'm going to put it into interest i don't think we don't have one i'm going to add it interest so it's going to be going into an other income account again this time we want uh interest earned that's fine i like interest income better just sounds cooler so i'm going to say there it is and let's say okay so there's that one let's save that go back to the balance sheet run it again so now we're going to have the decrease for the interest in the checking account decreasing the checking account or increase in the checking account because this was a deposit and then the other sides on the income statement in other income so within this other income we're going to put our our interest income and our dividend income all right so that's the next thing that that will often happen now the next thing that happens is at the end of the month we might get our statement or we might check our balance periodically monthly quarterly or yearly and it's going to differ right the balance in our statement is going to differ then from what we have here due to increases or decreases in in uh the value of the stock because the stock is on the market however we can give a pretty accurate idea of how what the actual value is so then there's an argument of we should change this to the market value periodically now we don't do that with other assets oftentimes like property plants and equipment we depreciate this one we don't typically try to value the equipment why would we do it with stocks because equipment is unique meaning one forklift may have the same model as another but the maintenance of the forklift will have a big impact on the value of it and whether or not you can actually sell it in a in a particular market setting whereas these we don't have that issue because these if we're buying and selling stuff that's actively being traded they are being traded on the market real time so we have a pretty good idea of what the value is the other problem is well if i change this to the market value increasing it or decreasing it what do i do with the other side because the other side would be income or a loss however we haven't realized an income or a loss because we didn't sell it so one argument would be you put the other side into equity but most people find that to be complicated so most of the time we would put the other side once again into other income here and and and down below and other income so that's what we'll do now you also could have a situation where you're reinvesting so you'll recall with one of these we have them uh reinvesting which one was it it was uh uh well i can't remember let's see we did e-tray vanguard and so the b of a we're reinvesting so you might have some of the dividends that are going back into your investment so so when you get your financial statement you might look at this one and say how much of of the money is going back in with with a dividend that was reinvested versus how much of it was an increase in the capital value uh so and so how would we do that well we wouldn't see it go through the bank feeds you might have to actually do a journal entry periodically to post these to the market value let's do this one first it would be like the most complex one let's say it went up in value so i'm going to go okay let's go we we could do it with a journal entry which would look like this or we could go into the chart of accounts because these are asset accounts and we can use the register because there's usually only like two accounts affected so let's look at this one the b of a let's go into the register and let's say that we're going to enter a journal entry and it happened we're going to do it at the end of the second month o 229 24 and let's say this is uh adjust to market value and let's say that it's this one increased to it's now worth 1700 that means it would have increased by $200 and the other side where's the other side going to go i'm going to put it into other income again but this one's going to be unrealized gain so let's make another one and this will be other income dividend and other investment income i'm going to call it unrealized gain now you might make an unrealized gain or loss i'm going to say loss for each account so that you can track them individually and make a parent account or you can make each individual once i'm going to save this one for example i could do that and then make another one i'm going to say add another one it's going to be another other income and we'll say other investment income and i'm going to say this is unrealized let's call it b of a unrealized gain loss and i'll make it subordinate to unrealized gain or loss so let's save that and then if i check it out i can then go into my balance sheet i'm going to run it again and so now we have our b of a balance at 1700 and then the other side is going over here to the income statement where we have unrealized gains or losses this represents the gain in value of the stock now again if i go into this one it might be the case that if i go into this journal entry and we check it out then it could be the case that part of this 200 was actually for for a dividend so so you might you might have to break this out and say okay what if that 200 what if like five dollars of it it was 195 was unrealized gains and losses and maybe five of it was dividend income so you might want to be able to break that out they're both going to be in in the other income section but realize if you're reinvesting the dividends to be technically correct you might break that out between the two here all right let's save and close that and then i'm going to go back and let's just do one more we're running long on time here the other one more thing you might do is you might say hey look i would like to keep my investment here at cost and then see the unrealized gains or losses in a subordinate account so that when i sell my stocks and bonds i might get an idea of what the what the gains and losses will be when i sell it because then that will have a tax implication so for example i might say okay let's let's imagine this one went down in value but instead of posting it to this account directly i'm going to make a new account so i'm going to say let's make a new account go back to my chart of accounts and i'm going to say this is going to be a new account for other investments and it's going to be investments other and i'm going to say this will be e-trade e-trade uh unrealized unrealized gain and loss uh on the balance sheet right because and then i'm going to say this is going to be subordinate to e-trade e-trade investments so i'm going to say okay let's save that and then if i scroll down now i have e-trades and e-trades gains and losses let's say e-trade went down by three hundred dollars so if i look at the value at the current point in time it's two thousand seven hundred dollars then instead of posting to this account i'm going to go to this register and post the adjustment here so i'm going to say this will be a journal entry as of 022924 and we're going to say it's a decrease of 300 the other side going to let's make another account add this is going to an other in other i'm going to keep them all at other income but this will actually be a decrease in the other income instead of making an other expense account and i'll show you why in a second we're going to say other investment income this is going to be e-trade let's say let's say well let's say e-trade unrealized gain loss income statement and then i'm going to make it subordinate to unrealized gain and loss all right let's save that okay saving it and then i'm going to go back to the balance sheet run this one again so why would that be useful because now if i look at e-trade i can see all the investments and then within e-trade i can see what i bought it for and i can also see the decrease in value and this would be the current value that's currently on the statement that could be useful because if i sell this whole thing if i sell it then i can say i'm actually going to have a loss on the sale for tax purposes because i bought it for three thousand i'd sell it for two thousand uh seven hundred sometimes it's it's difficult to track the cost and so you might try to track that internally by breaking this out and then on the profit and loss over here you're going to see down below that we have under unrealized gains slash loss notice that this one was a loss we didn't put it under an expense other expenses you could make an other expenses account and put it down here but with the unrealized gains and losses it could flip to either being an income or a loss right because it's unerred you don't know if the stocks are going to go up in value or down in value so it's useful to call it income other income and then you can you can have a negative amount representing the expenses and if it bothers you to have other income here you could change the title i believe by saying i'm going to edit the titles up top and then where it says uh other income you could just you could say other income and expenses expenses and you can say that's going to be a negative it takes a little bit of time for that to refresh sometimes but so that means so then you don't have two separate categories down here for the other income you can right there it is beautiful right other income and expenses so then this one could flip to income or an expense or be positive or a negative so now you have this whole thing down here which you can collapse and you could get some detail if you wanted to break out the detail to see that you know the dividends you could also try to create sub accounts for the dividends to see where the dividends are coming from if you wanted to similar to what we did with the unrealized gains and losses okay so that's a lot above and beyond the normal bank feeds but i just want to touch on those uh investments because they had their own issues let's go to the trial balance and run this this is where we stand if you're following along uh here so this is the balance sheet on top of the income statements if you're if your numbers tie up to these numbers then great we're running together if not and you can you could change the date range increase in the date it's also a date range issue drill down on the numbers and then you can make the adjustments to the date and the source document if you so choose